What is a Labor Rate?
A Labor Rate is the price of the employees based on a unit of time. Labor Rate is used to define the cost of labor for an Estimate and will eventually determine the cost of the employee’s time to the employer. The application of a Labor Rate can be different for each Electrical Estimating Software provider.
In Red Rhino Electrical Estimating Software, the Labor Rate is defined as the Crew Composite Rate. The Crew Composite Rate is the average hourly cost for a job’s entire crew. This value is entered by the company administrator and is used as the default rate for all new Estimates. The estimator may change it from the Recap page.
The entire crew consists of how many foremen, how many journeymen, and how many helpers you operate a job with. This is known as the Crew Mix. Red Rhino Electrical Estimating Software calculates the total number of hours required to complete a project, as shown in the Recap. For Red Rhino to calculate the exact dollar cost of labor, it multiplies the total number of labor hours by your Crew Composite Rate.
How do you calculate your Labor Rate?
First, you determine what your crew mix is. For example, assume you estimated a job, and the recap shows 80 hours to complete. You decide to man the job with one journeyman and one helper; this is called the crew mix.
Next, you must also calculate the total cost of each person, including benefits, labor burden, workers’ compensation, and any other costs associated with his hourly wage. For this example, let’s assume your calculated cost for a Journeyman is $37.50 per hour and your calculated cost for the helper is $25.75 per hour.
For the 80-hour job - Crew Mix 2 electricians
1 - Journeyman cost/hour: $37.50
1 - Helper cost/hour: $25.75
Total cost for 2-man hours: $63.25
Total cost per man hour: $63.25 / 2 = $31.62
You would input that Crew Composite Rate, $31.62, into the Recap. For another example, see the end of this article.
Setting the Labor Rate on an Estimate
To edit the Labor Rate in Electrical Estimating Software, you will edit the Crew Composite Rate on the Recap. Please follow the steps below to edit the Crew Composite Rate (Labor Rate) for the Estimate:
1. After entering all material and labor into the Electrical Estimating Software’s Take-Off, click Recap at the top right of your screen.
2. Click Edit Header at the top right of your screen on the Recap page.
3. After clicking Edit Header, you will now be able to edit the Crew Composite Rate (Labor Rate) for the Estimate. The Crew Composite Rate is an average of your crew’s hourly rate. Enter in your crew’s average hourly wage, then click Save Header at the top right.
You have now set the Labor Rate for this Estimate.
Presetting the Labor Rate for New Estimates
Setting the Labor Rate for every new Estimate can help save time when you use the same (or similar) crew for each job. This is a common feature in Electrical Estimating Software. To do this in Red Rhino Electrical Estimating Software, follow the steps below:
1. From the Home page, click on Company Administration in the left column.
2. A subcategory menu will appear after clicking on Company Administration. To preset the Labor Rate for new Estimates, select Estimate/Recap Setup.
3. Now, click Edit at the top right and change the Crew Composite Rate (Labor Cost) to match the average hourly cost of your entire crew.
4. After inputting your crew’s Crew Composite Rate, click Save at the top.
You have set the Labor Rate for all new Estimates in the Electrical Estimating Software.
Calculating Crew Composite Rate: Example 2
For a second example using Electrical Estimating Software, assume that you estimated a job, and the Recap shows a total of 640 labor hours. You want to complete the job in 4 weeks.
640 hours / 4 weeks / 40 hours per week = 4 men
You determine that your crew mix will be one foreman, one journeyman, and two helpers. Also, your calculated total cost for a Foreman is $52.50 per hour, your calculated total cost for a Journeyman is $47.50 per hour, your calculated total cost for the helper is $35.75 per hour, and your calculated total cost for the 2nd helper is $32.75 per hour.
For the 640-hour job - Crew Mix 4 electricians
1 - Foreman cost/hour: $52.50
1 - Journeyman cost/hour: $47.50
1 - Helper cost/hour: $35.75
1 - Helper cost/hour: $32.75
Total cost for 4-man hours: $168.50
Total cost per man hour: $168.50 / 4 = $42.12
You would input that Crew Composite Rate, $42.13, into the Recap.